Insurers to pull the plug on child-only health plans

New healthcare law kicks in todayInsurers pulling the plug on coverage for thousands of Texas children

TODD ACKERMAN, HOUSTON CHRONICLE

Published
5:30 am CDT, Wednesday, September 22, 2010

Tens of thousands of Texas children will be directly affected by the 11th-hour decision of a number of major health insurance companies to stop selling child-only policies rather than comply with the new federal law that requires they cover youngsters with pre-existing conditions.

All insurance companies starting today will accept children in family plans regardless of medical history, but Texas insurers United Healthcare, Aetna Inc. and Cigna Inc. are among the ones that will no longer offer policies just for individuals under 19.

Such plans have grown in popularity in recent years as employee-based policies have cut coverage of dependents.

"What we're seeing is what we've thought all along: Health insurance companies are really only about the bottom line," said Robert Sanborn, president of Children at Risk, a nonprofit children's advocacy organization based in Houston. "They pretend to care about families and children, but when it comes down to it, they're happy to kick children to the side."

Effects unclear

Spokespersons for Aetna and Cigna said the change was made to keep family coverage affordable for as many people as possible and avoid significant price hikes. They said that under the new law, people suddenly seeking coverage would predominantly be those who need to consume healthcare services immediately for known, high-cost conditions.

It's unclear exactly how many youngsters will be affected by the law. The Kaiser Family Foundation, a nonprofit that researches healthcare data, reports 263,800 Texans under 19 currently are covered by either child-only policies or family policies purchased individually rather than through an employer.

Companies stopping the policies will honor them until they come up for renewal, according to other reports.

More than 3 million Texas children are covered by their parents' employer-based family plans.

United Healthcare, the state's second-largest health insurance carrier, enrolls about 2.3 million Texans, or a quarter of the Texas market, according to a recent study. A spokeswoman said United Healthcare is optimistic government regulations can be written to enable the company to offer child-only plans.

Blue Cross Blue Shield of Texas, the state's largest carrier, will offer child-only policies under a new product once it is approved by the state, a spokeswoman said. She gave no details about it but said the company, which controls 44 percent of the Texas market, is "proud to be one of the few health insurers offering policies to those under 19."

Things change in 2014

Companies will only be able to stop selling child-only policies until 2014, when the new law requires all people to have insurance. They are currently only required to cover pre-existing conditions if they provide insurance to that group of people.

The customers companies gain in 2014 will better enable insurers to subsidize care of those with pre-existing conditions, said healthcare observers.

But Texas Rep. Garnet Coleman, D-Houston, a member of President Barack Obama's committee of state legislators on healthcare reform, said the move was "political more than anything else."

He argued the number of youngsters with pre-existing conditions the companies would gain would be small.

"Shame, shame, shame on them," Coleman said. "If that's their point of view, they don't need to be in the health insurance business."

Pauline Rosenau, a professor of Management, Policy & Community Health at the University of Texas School of Public Health, said the middle class will feel the greatest impact from the change and likely have to forego coverage of their children if their employer-based family plans cut coverage of dependents.

"Except for new high-risk pools established by the law, I'm just not sure what other options they'll have," said Rosenau. The pools provide coverage for those who have suffered from a condition for six months and have been denied coverage.

Bigger burden for state

Rosenau initially thought the number of Texas children affected by the change would be small but was struck to discover more than a quarter-million in the state are already covered by the plan. She said that was much higher than previous estimates.

Although most poor children with preexisting conditions already qualify for insurance through programs such as Medicaid and the Children's Health Insurance Program, Sanborn and others said they think that the reduction of child-only policies will add to the state's burden.

Sanborn said he expects it will also increase the burden on small- and medium-sized employers, which already anticipate struggling to meet the demands of the healthcare law. He said many will have to offer such coverage if they want to attract good people.